PR and advertising are at a crossroads

Advertising and public relations stand at a crossroads ? at once battered by recession-driven corporate downsizing and confronted with a bevy of new and often untested online platforms. Amid the uncertainty, firms have battled back with disparate strategies: eschewing general advertising to reach smaller target audiences; rushing to integrate the once separate fiefdoms of PR and advertising; and seeking to capitalize on the disintegration of multinational firms by buying up local branch offices.

At the same time, both industries are scrambling to embrace social media such as Facebook, Twitter and YouTube as cheaper alternatives to print and television that have long been their bread and butter.

But with new media still largely unproven, others express reservations about the online exuberance and have instead bucked conventional wisdom, continuing to invest in traditional platforms.

And regardless of preferred tactics, leaders in both sectors say the pie is shrinking, and those who don’t evolve will be left behind or bankrupt. Some firms have cut salaries, slashed workforces or renegotiated retainer fees accordingly.

“This is business Darwinism right now,” says Sissy DeMaria, president of Coral Gables, Fla., public relations firm Kreps DeMaria. “You’re going to see a lot of consolidation in the industry, and only the strongest will survive.”

For decades, the division of labor was clear. Madison Avenue types took care of the 30-second spots, the billboards and the full-page ad in Sunday’s paper. Their cousins in public relations drafted press releases, networked with reporters to land favorable coverage and helped handle crises that drew negative media attention.

But where in this tidy arrangement does Facebook fall? Or YouTube? Or Twitter? Both groups are rushing to answer that question, and with all the more urgency as their clients seek to slash marketing budgets.

Firms that never would have considered video part of their repertoire a few years ago are staking a claim to the digital outgrowth of TV advertising.

“As a PR firm, creating a video is not something you’d traditionally do for a client,” DeMaria says. “But we see that this is the next wave. . . . We have to embrace this new technology.”

Cash-strapped companies have also begun demanding greater cooperation between the separate firms handling their image in hopeof seeing better returns.

“Public relations and advertising are blending much more than they did in the past,” says Jeff Steinhour, director of content management at the advertising agency Crispin Porter + Bogusky. “They used to be separate worlds ? like church and state. Now you’re seeing them at the same meetings at the same time.”

Cori Rice, who heads the Miami branch of international PR firm Hill & Knowlton, cites a campaign with breakfast chain Denny’s. Seeking to strike a chord with a nation in recession, they promised a free Grand Slam breakfast to all comers. The promotion had a 30-second TV spot, she says, but because her firm and the ad agency worked closely together, she was able to use traditional PR tactics and social media to augment the advertising message, saturating blogs and news sites with buzz about the promotion. They gave away 2 million breakfasts, and sales jumped in the months that followed.

And with less to spend on marketing, PR executives say clients are avoiding expensive general media campaigns in favor of reaching niche audiences more inclined toward their product. “Nobody has the money these days to waste in communicating to the masses,” says Angel Langston, principal of PR firm Langston Mizrachi & Co in Plantation, Fla. “Messages must be directed specifically to a defined market.”

Competition for consumer attention has also intensified, as the Internet increasingly enables anyone to create and share information. This democratization means the Web has no equivalent to the Super Bowl commercial ? no platform with such an outsized, captive audience. And that, Rice says, has led firms to throw their weight behind efforts designed to get noticed above the din.

“In order to cut through the marketplace to get to the consumer, you have to scream,” Rice says. “There’s nothing normal about this environment, and if you retreat, you’re out of business.”

Crispin Porter + Bogusky has been an early adopter of this approach. The once small agency burst onto the national scene in the late 1990s with a provocative campaign to dissuade teens from smoking tobacco. One 30-second TV spot featured teens piling body bags ? one for each person killed by smoking in a single day ? in front of the headquarters of a major tobacco conglomerate.

The campaign’s shock value earned it media attention well beyond the ads themselves, and Crispin Porter, Steinhour says, learned an important lesson that grew ever more critical as the Internet rose to prominence.

“When you can create advertising that creates PR, that allows for the discussion to take off,” he says. “Creating news or sparking controversy or piquing interest really is the goal. That takes some courage, but some brands or marketers are not afraid of that.”

More so than traditional advertising, the supposed measure of success in social media centers on creating buzz ? a task at which Crispin Porter has excelled, with campaigns that are shocking, humorous, or to some, downright offensive.

In one Burger King campaign, the agency featured video interviews with people in developing nations choosing between a Burger King Whopper and McDonald’s Big Mac. The campaign was designed to showcase the Whopper’s appeal, but many were turned off by the title ? Whopper Virgins ? a term used to refer to the Third World people featured in the video.

Despite the potential for backlash, Steinhour says he’s seen a steadily growing body of brands adopt tactics that risk negative publicity with some to rack up views in a target demographic.

Crispin Porter’s Melissa Goodis cites the agency’s Whopper Sacrifice campaign as a prime example of how social media can be cleverly leveraged to make campaigns “go viral,” or spread through social networks. The Facebook page promotion offered users a free Whopper ? but only if they dropped 10 people from their online list of friends, a major faux pas in the world of social networking. As part of the arrangement, Crispin Porter would then notify the erstwhile friends that they’d been ditched for a beef patty on a sesame seed bun.

News of the campaign spread like wildfire through the blogosphere, and Facebook quickly ordered the agency to end the offer ? but not before, the listing tells visitors, “your love for the WHOPPER Sandwich proved to be stronger than 233,906 friendships.”

Yet for all the buzz, the burgeoning enthusiasm belies doubts about how effective or essential advertising in these mediums truly is.

“Right now everything is about Twitter,” says Goodis, interactive media supervisor at Crispin Porter. “(But) it’s only the top 10 percent of Twitter users who are accounting for the overwhelming majority of content on that site. So do I think that there is a lot of hype that ‘you have to be in this space to connect with people’ and ‘you really have to have those engagements?’ “

While the general trend has been toward downsizing and embracing digital media, a few firms have staked out an opposing course ? either expanding or investing in traditional mediums and messages.

For all the buzz surrounding new media platforms, online marketing still reaches an audience that largely resides in younger demographics, but those seeking to reach a wider audience have continued to invest in more traditional advertising ? albeit it more targeted ways.

While Royal Caribbean Cruises has ramped up its online advertising, television spots have remained an integral component of its media campaigns, in part because their target audience sprawls across age groups.

“This is a broad reach product,” says Betsy O’Rourke, the company’s senior vice president of marketing. “There are many different kinds of people who enjoy cruising, from young people right up to seniors traveling on their 50th wedding anniversary.”

With a reduced marketing budget, the cruise line has tried to maintain its advertising by steering away from more expensive national ad time and focusing on local markets, O’Rourke says. The company is also experimenting with buying cheaper TV time that gives networks more flexibility on when to air purchased ads.

Even billboards, among the most old-fashioned products in advertising, have enjoyed a resurgence in some quarters, as prices have dropped and some companies have spotted an opportunity to drive traffic to their businesses.

“Last year we were looking into the billboards but their prices were anywhere between $9,000 and $16,000,” says Terry Zarikan, who oversees product management for Miami restaurant group China Grill Management, which recently bought billboard space on I-95 as it cuts through downtown Miami. “Now we can get the same locations in the $5,000 range.”

Beyond their choice of mediums, some firms have also emphasized a more traditional message in recognition of the economic troubles weighing heavily on the American psyche.

“People are going in many ways back to basics and enjoying the things in life that are not as opulent,” says Jorge Plasencia of Miami advertising and public relations firm Republica. “Our messaging has to embrace that and embrace the current times we’re in.”

Plasencia says he has stressed family-oriented campaigns and sponsoring community events such as “Viva Broward!” and “Zo’s Summer Groove” to tap into this “back-to-basics” sentiment.

And while multinational firms are downsizing, independent agencies have expanded into the recession by buying up one-time branch offices, according to Manny Machado, who says his Coral Gables-based integrated marketing firm MGS Communications is close to acquiring an agency in New York in a cash and equity deal.

“All the multinationals do not have the financial wherewithal to grow their portfolios. They’re trying to get rid of their firms,” he says. “Meanwhile, independent agencies are looking at how we can grow, and rather than hustle for all this business, we can grow the agency by acquiring.”

But even as these firms strive to evolve, present budgetary shortfalls loom large. The recession has meant belt-tightening of all sorts at firms in both professions. Several firms say they have temporarily reduced retainers for long-time clients as they try to weather the economic turbulence.

“I don’t want to be a bank, but I want to be flexible,” Machado says. “We try to help them out.”

Machado says he had to cut budgets across the board by 10 percent in January to keep moving forward, which resulted in nine staff layoffs. “We did that with great pain,” he says. “But we had to cut 10 percent to save the other 90 percent.”

Many executives predict both industries will be forced to consolidate with some business running dry. Julie Talenfeld of Boardroom Communications says she’s already fielded two merger offers.

Advertising firms have been hit since clients often are more inclined to cut expensive TV ads than slash jobs or salaries. Ad spending plunged 14 percent nationwide in the first quarter of 2009 after a 9 percent drop the quarter before, according to TNS Media Intelligence, forcing many advertising firms to cut staff. Even Crispin Porter laid off 3 percent of its staff earlier this year.

Times have been particularly tough for those hoping to break into the industry. This spring, Jose Cano appeared to be one of the lucky few who had made it.

After summers on the PR internship circuit, he says he’d landed a job with Miami firm AMG Worldwide. But the day before his graduation, he says the company informed him that his spot had disappeared.

Cano eventually found a paid summer internship with rbb, a Miami-based PR firm, and he still says he’s better off than he could be.

“One of my really good friends graduated in PR and minored in entrepreneurship,” Cano says. “He’s still doing bartending.”

But there is one area where firms are hiring: new media. Machado’s digital media group had just two people a year ago. Today, he says, the team numbers 11 associates. Despite the uncertainty over whether views or tweets will pay off, few feel they can afford to miss this boat ? wherever it’s headed.

“Is there a scientific measurement for the evolving market we’re in? No, that doesn’t exist yet,” Machado says. “But we have to play in that sandbox if we’re going to do the right thing for our client.”